Consolidated Financial Results for the Fiscal Year Ended March 31, 2012 (Japan GAAP) May 14, 2012 Company name: SQUARE ENIX HOLDINGS CO., LTD. Shares traded: Tokyo Stock Exchange, First Section Company code: 9684 Company URL: http://www.square-enix.com/eng Representative: Yoichi Wada, President and Representative Director Contact: Yosuke Matsuda, Director and Chief Financial Officer, tel (03) 5333-1144 Annual general meeting of shareholders: June 26, 2012 (planned) Financial report submission: June 27, 2012 (planned) Cash dividend payment commencement: June 5, 2012 (planned) Supplementary annual materials prepared: Yes Annual results presentation held: Yes (for institutional investors and analysts) (Amounts under one million yen are rounded down) 1. Consolidated Financial Results (April 1, 2011 to March 31, 2012) (1) Consolidated Financial Results (Millions of yen and year-on-year changes in percents) Net sales Operating income Recurring income Net income (loss) Fiscal year ended % % % % March 31, 2012 127,896 2.1 10,713 46.2 10,297 91.0 6,060 - March 31, 2011 125,271 (34.8) 7,325 (74.1) 5,390 (80.6) (12,043) - Note: FY ended March 31, 2012 Comprehensive income: 5,451 million yen ( - %) FY ended March 31, 2011 Comprehensive loss: 15,094 million yen ( - %) Earnings (loss) per share, basic Earnings (loss) per share, diluted Return on equity Recurring income to total assets Operating margin Fiscal year ended yen yen % % % March 31, 2012 52.66 52.55 4.5 4.9 8.4 March 31, 2011 (104.66) - (8.4) 2.6 5.8 Note: FY ended March 31, 2012 Equity in gain (loss) of affiliated companies: - million yen FY ended March 31, 2011 Equity in gain (loss) of affiliated companies: - million yen (2) Consolidated Financial Position (Millions of yen, ratios in percents and per share data) Total assets Net assets Equity ratio Net assets per share As of % yen March 31, 2012 213,981 137,297 63.3 1,177.87 March 31, 2011 206,336 135,143 64.7 1,160.66 Note: Total equity As of March 31, 2012: 135,536 million yen As of March 31, 2011: 133,558 million yen (3) Consolidated Statements of Cash Flows (Millions of yen) From operating activities From investing activities From financing activities Closing cash and cash equivalents Fiscal year ended March 31, 2012 6,786 (5,778) 299 110,116 March 31, 2011 14,827 30,407 (42,354) 109,751
Transcript
Consolidated Financial Results for the Fiscal Year Ended March 31, 2012 (Japan GAAP)
May 14, 2012
Company name: SQUARE ENIX HOLDINGS CO., LTD. Shares traded: Tokyo Stock Exchange, First Section Company code: 9684 Company URL: http://www.square-enix.com/eng Representative: Yoichi Wada, President and Representative Director Contact: Yosuke Matsuda, Director and Chief Financial Officer, tel (03) 5333-1144 Annual general meeting of shareholders: June 26, 2012 (planned) Financial report submission: June 27, 2012 (planned) Cash dividend payment commencement: June 5, 2012 (planned) Supplementary annual materials prepared: Yes Annual results presentation held: Yes (for institutional investors and analysts)
(Amounts under one million yen are rounded down)
1. Consolidated Financial Results (April 1, 2011 to March 31, 2012)
(1) Consolidated Financial Results (Millions of yen and year-on-year changes in percents) Net sales Operating income Recurring income Net income (loss)
March 31, 2011 125,271 (34.8) 7,325 (74.1) 5,390 (80.6) (12,043) - Note: FY ended March 31, 2012 Comprehensive income: 5,451 million yen ( - %) FY ended March 31, 2011 Comprehensive loss: 15,094 million yen ( - %)
Earnings (loss)
per share, basic
Earnings (loss) per share,
diluted
Return on equity
Recurring income to total
assets
Operating margin
Fiscal year ended yen yen % % %
March 31, 2012 52.66 52.55 4.5 4.9 8.4
March 31, 2011 (104.66) - (8.4) 2.6 5.8Note: FY ended March 31, 2012 Equity in gain (loss) of affiliated companies: - million yen FY ended March 31, 2011 Equity in gain (loss) of affiliated companies: - million yen
(2) Consolidated Financial Position (Millions of yen, ratios in percents and per share data)
Total assets Net assets Equity ratio Net assets per share
As of % yen
March 31, 2012 213,981 137,297 63.3 1,177.87
March 31, 2011 206,336 135,143 64.7 1,160.66 Note: Total equity As of March 31, 2012: 135,536 million yen As of March 31, 2011: 133,558 million yen
(3) Consolidated Statements of Cash Flows (Millions of yen)
From operating activities
From investing activities
From financing activities
Closing cash and cash equivalents
Fiscal year ended
March 31, 2012 6,786 (5,778) 299 110,116
March 31, 2011 14,827 30,407 (42,354) 109,751
2. Dividends Dividends per share Total annual
dividend payments
Dividend payout ratio
(consolidated)
Dividend on equity
(consolidated)1Q 2Q 3Q 4Q Total
yen yen yen yen yen million yen % %Fiscal year ended
March 31, 2011 - 10.00 - 20.00 30.00 3,452 - 2.4
Fiscal year ended March 31, 2012 - 10.00 - 20.00 30.00 3,452 57.0 2.6
Fiscal year ending March 31, 2012 (projection)
- 10.00 - 20.00 30.00 38.4
3. Consolidated Forecasts (April 1, 2012 to March 31, 2013)
(Millions of yen, year-on-year changes in percents and per share data) Net sales Operating income Recurring income Net income Earnings
4. Other (1) Significant changes among major subsidiaries during the period: No (2) Changes in accounting policies, procedures, and methods of presentation for consolidated financial statements
1. Changes associated with revision in accounting standards: Yes 2. Other changes in accounting standards: No 3. Change in accounting estimate: Yes 4. Retrospective restatement: No
(3) Outstanding shares (common stock) 1. Number of shares issued and outstanding (including treasury stock):
As of March 31, 2012 115,370,596 As of March 31, 2011 115,370,596
2. Number of treasury stock: As of March 31, 2012 301,247 As of March 31, 2011 299,594
3. Average number of shares during the period (cumulative): Fiscal year ended March 31, 2012 115,070,185 Fiscal year ended March 31, 2011 115,072,040
Disclaimer: (1) This document is a translation of the Japanese language “Kessan Tanshin” prepared in accordance with the guidelines of the Tokyo Stock Exchange. The Japanese language document shall prevail in the event any differences or discrepancies exist between this English translation and the original. (2) At the time of disclosure of this report, audit procedures for financial statements pursuant to the Financial Instruments and Exchange Law had not been completed. (3) The forward-looking statements in this document are based upon the information currently available and necessarily include elements that are not entirely predictable. Actual results may differ from the forward-looking statements in this document. (4) For additional information about forecasts, please refer to “Consolidated forecasts” section on page 2.
Supplemental Information – Index Page
1. Consolidated Results for the Fiscal Year Ended March 31, 2012 1
(1) Analysis of consolidated business results 1
(2) Analysis of consolidated financial position 3
(3) Basic policy for profit distribution and dividends 4
2. The Group’s Outline of Operations 5
3. Management Policy 7
(1) Management philosophy 7
(2) Management targets 7
(3) Medium- and long-term management strategy 7
(4) Issues facing management 7
4. Consolidated Financial Statements 8
(1) Consolidated Balance Sheets 8
(2) Consolidated Income Statement and Consolidated Statement of Comprehensive Income 10
(3) Consolidated Statements of Changes in Net Assets 13
(4) Consolidated Statements of Cash Flows 15
5. Segment Information 17
1. Consolidated Results for the Fiscal Year Ended March 31, 2012
(1) Analysis of consolidated business results
The Square Enix Group (the “Group”) is continuing determined efforts to strengthen the competitiveness
and profitability of its business segments of Digital Entertainment, Amusement, Publication and
Merchandising.
Net sales for the fiscal year ended March 31, 2012 totaled ¥127,896 million (an increase of 2.1% from the
prior fiscal year), operating income amounted to ¥10,713 million (an increase of 46.2% from the prior fiscal
year) and recurring income amounted to ¥10,297 million (an increase of 91.0% from the prior fiscal year).
A discussion of results by segment for the fiscal year ended March 31, 2012 follows.
• Digital Entertainment
The Digital Entertainment segment plans, develops, distributes and operates digital entertainment content
primarily in the form of games. Digital entertainment content is offered to meet customer lifestyles across a
variety of usage environments such as consumer game consoles (including handheld game machines),
personal computers and mobile phones (including smartphones).
During the fiscal year ended March 31, 2012, the Group released major titles on consumer game consoles
(“FINAL FANTASY XIII-2” [Japan, North America, Europe]; “DEUS EX: HUMAN REVOLUTION” [North
America, Europe, Japan]), which favorably grew sales of packaged software. Regarding content on
platforms such as browser and smartphone, an online simulation game called “SENGOKU IXA” in
partnership with Yahoo! Japan, launched in August 2010 continues to post favorable results. Further,
starting January 2012, services for a Mobage-based social game called “FINAL FANTASY BRIGADE”
whose total registered users exceeded 2 million in March 2012 enjoys robust growth.
Net sales and operating income in the Digital Entertainment segment totaled ¥71,871 million (an increase of
11.9% from the prior fiscal year) and ¥12,602 million (an increase of 11.7% from the prior fiscal year),
respectively.
• Amusement
The Amusement segment consists of the operation of amusement facilities and the planning, development
and distribution of arcade game machines and related products for amusement facilities.
During the fiscal year ended March 31, 2012, due to the softening market conditions, amusement facilities
operations stagnated on sales during the second half of the fiscal year. However, the Group showed steady
increase on operating income compared to the prior fiscal year from the efficiency in operations of
amusement facilities and investment in machinery.
1
Net sales and operating income in the Amusement segment totaled ¥41,921 million (a decrease of 6.9%
from the prior fiscal year) and ¥2,552 million (an increase of 17.2% from the prior fiscal year), respectively.
• Publication
The Publication segment includes comic books, game strategy books and comic magazines.
During the fiscal year ended March 31, 2012, due to the completion of larger serial manga titles, monthly
magazines and comic books stagnated on sales. On the other hand, the Group has been dedicated to
developing network-based publication businesses including the Group’s GANGAN ONLINE, a web-based
comic magazine.
Net sales and operating income in the Publication segment totaled ¥11,335 million (a decrease of 13.1%
from the prior fiscal year) and ¥2,575 million (a decrease of 19.6% from the prior fiscal year), respectively.
• Merchandising
The Merchandising segment includes the planning, production, distribution and licensing of derivative
products of titles owned by the Group.
During the fiscal year ended March 31, 2012, the Group continued to distribute and license items such as
character goods and soundtracks based on the Group’s own IPs while diversifying new opportunities for
profit by strengthening its character goods lineup with additional products based on third party content and
overseas expansions.
Net sales and operating income in the Merchandising segment totaled ¥2,767 million (a decrease of 8.3%
over the prior fiscal year) and ¥742 million (an increase of 9.1% over the prior fiscal year), respectively.
(Consolidated forecasts)
The Group is prepared to meet the new business environment that is expanding its customer base through
the proliferation of broadband networks and a wider selection of digital entertainment environment. The
Group views this change as an opportunity to capture new profit sources and are making every effort to
expand its financially well-established network related businesses to have the Group’s attractive content
enjoyed by an ever-growing number of customers.
In the current fiscal year ending March 31, 2013, the Group is focusing all efforts on a substantial earnings
improvement.
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(2) Analysis of consolidated financial position
(i) Assets, liabilities and net assets
• Assets
As of March 31, 2012, total current assets were ¥172,161 million, increasing by 4.8% compared to the prior
fiscal year. This was mainly due to increases in content production account of ¥5,157 million and notes and
accounts receivable of ¥2,957 million, respectively.
Fixed assets were ¥41,819 million, decreasing by 0.5% compared to the prior fiscal year. This was mainly
due to a decrease in deferred tax assets by ¥621 million, offset by an increase in rental deposits of ¥469
million.
As a result, total assets increased by 3.7% to ¥213,981 million.
• Liabilities
As of March 31, 2012, total current liabilities were ¥33,778 million, an increase of 18.5% compared to the
end of the prior fiscal year. This was mainly due to increases in short-term loans of ¥3,914 million and
accrued income taxes of ¥1,765 million.
Non-current liabilities increased by 0.5% to ¥42,906 million. The increase was mainly due to an increase in
allowance for employees’ retirement benefits of ¥747 million, offset by a decrease of ¥508 million in asset
retirement obligation.
As a result, total liabilities increased by 7.7% to ¥76,684 million.
• Net assets
As of March 31, 2012, net assets were ¥137,297 million (an increase of 1.6% compared to March 31, 2011).
This was mainly due to net income of ¥6,060 million, dividend payments of ¥3,452 million, and a decrease
in foreign currency translation adjustments of ¥767 million.
(ii) Consolidated Cash Flow
As of March 31, 2012, cash and cash equivalents totaled ¥110,116 million, an increase of ¥364 million
compared to March 31, 2011. Cash flows during the fiscal year ended March 31, 2012 as well as the
principal factors behind these cash flows are described below.
• Cash flows from operating activities
Net cash provided by operating activities during the fiscal year ended March 31, 2012 totaled ¥6,786 million
(a decrease of 54.2% compared to the prior fiscal year).
Income before income taxes and minority interests of ¥9,866 million, increases in inventories of ¥5,137
million and notes and accounts receivable-trade of ¥3,008 million, and depreciation and amortization of
¥5,039 million led to the overall provision of cash from operating activities.
3
• Cash flows from investing activities
Net cash used in investing activities totaled ¥5,778 million (compared to net cash provided by investing
activities of ¥30,407 million in the prior fiscal year).
Main factors are proceeds from collection of rental deposits of ¥1,084 million, payments for rental deposits
of ¥1,492 million, and purchase of property and equipment of ¥4,620 million.
• Cash flows from financing activities
Net cash provided by financing activities totaled ¥299 million (compared to net cash used in financing
activities of ¥42,354 million in the prior fiscal year). The main factors are an increase in short-term loans
payable of ¥3,791 million and cash dividends paid of ¥3,446 million.
(3) Basic policy for profit distribution and dividends
The Group recognizes the return of profits to shareholders as one of its most important management tasks.
The Group maintains internal reserves to enable priority to be given to investments that will enhance the
value of the Group. Such investments may include capital investments and M&A for the purpose of
expanding existing businesses and developing new businesses. The retention of internal reserves is done
while also taking into account return to shareholders, operating performance and the optimal balance for
stable dividends. The Group therefore strives to maintain stable and continuous dividends. The portion of
dividends linked to operating results is determined by setting a consolidated payout ratio target of
approximately 30%.
Regarding dividend payments for the fiscal year ended March 31, 2012, the Group projects annual
dividends of 30 yen per share, including 20 yen per share to be submitted for resolution at the Board of
Directors’ Meeting planned for May 18, 2012.
4
2. The Group’s Outline of Operations
The following outline of operations lists the Group’s primary business segments and major subsidiaries.
(Consolidated subsidiaries)
Domain Primary Business Description Region Company Name
Digital Entertainment
Plans, develops, distributes, and
operates games digital
entertainment primarily in the form
of computer games
Japan SQUARE ENIX CO., LTD. TAITO CORPORATION SMILE-LAB CO., LTD.
North America
SQUARE ENIX, INC. CRYSTAL DYNAMICS, INC. EIDOS INTERACTIVE CORP.
Europe SQUARE ENIX LTD. IO INTERACTIVE A/S
Asia SQUARE ENIX (China) CO., LTD. HUANG LONG CO., LTD.
Amusement
Operation of amusement facilities
and planning, development and
distribution of arcade game
machines for amusement facilities
and related products
Japan TAITO CORPORATION SQUARE ENIX CO., LTD.
Publication Comic books, game strategy
books, comic magazines, etc.
Japan SQUARE ENIX CO., LTD.
North America
SQUARE ENIX, INC.
Europe SQUARE ENIX LTD.
Merchandising
Planning, production, distribution
and licensing of derivative
products of titles owned by the
Group
Japan SQUARE ENIX CO., LTD. TAITO CORPORATION
North America
SQUARE ENIX, INC.
Europe SQUARE ENIX LTD.
(Note) The above table lists major consolidated subsidiaries only.
5
The Group’s Business Diagram:
Note: Above business diagram only includes key consolidated subsidiaries.
Note: Above business diagram only includes key consolidated subsidiaries.
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3. Management Policy
(1) Management philosophy
With a philosophy "to spread happiness across the globe by providing unforgettable experiences," the
Group offers advanced, high-quality content and services. The Group strives to reward shareholders by
maximizing profit based on efficient use of resources in the generation of sustained business development
and growth.
(2) Management targets
The Group recognizes the utmost importance of achieving growth underpinned by profitability. The Group
pursues targets of generating an earnings per share growth rate of over 10% and a recurring income to
sales ratio of above 20%.
(3) Medium- and long-term management strategy
Management’s key task is to create advanced, high-quality content and services that allow the Group to
grow in the medium- and long-term while maintaining profitability. As the development and popularization of
information technology (IT) and network environments rapidly advance, the Group anticipates a major
transformation in the structure of the digital entertainment industry. The Group believes that this will be
driven by factors such as increased consumer needs in the area of network-compliant entertainment and
growing access to a diverse range of content by users of multi-function devices. The Group strives to
respond to these changes, and has adopted a medium- to long-term management strategy that focuses on
pioneering a new era in digital entertainment.
(4) Issues facing management
In order to achieve the Group’s medium- to long-term strategy, it is imperative to expand its global business
and meet customers’ diverse content needs. To do so, it is critically important that the Group acquires and
develops ideally suited human resources.
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4. Consolidated Financial Statements
(1) Consolidated Balance Sheets
(Millions of yen)
As of March 31, 2012 As of March 31, 2011
Assets
Current assets
Cash and deposits 111,495 111,126
Notes and accounts receivable 18,431 15,474
Merchandise and finished goods 2,343 2,992
Work in progress 738 287
Raw materials and supplies 573 427
Content production account 25,047 19,890
Deferred tax assets 5,022 4,493
Income taxes receivable 6,396 6,907
Other 2,236 2,821
Allowance for doubtful accounts (124) (120)
Total current assets 172,161 164,301
Non-current assets
Property and equipment
Buildings and structures 16,645 17,617
Accumulated depreciation (12,414) (12,771)
Buildings and structures (net) 4,231 4,846
Tools and fixtures 11,147 10,840
Accumulated depreciation (9,245) (9,031)
Tools and fixtures (net) 1,902 1,808
Amusement equipment 19,601 19,948
Accumulated depreciation (17,008) (17,643)
Amusement equipment (net) 2,593 2,304
Other 193 188
Accumulated depreciation (127) (99)
Other (net) 65 89
Land 8,102 8,277
Construction in progress 288 2
Total property and equipment 17,183 17,328
Intangible assets
Other 10,121 10,324
Total intangible assets 10,121 10,324
Investments and other assets
Investment securities 598 386
Rental deposits 12,785 12,316
Deferred tax assets 460 1,082
Other 1,341 1,280
Allowance for doubtful accounts (672) (683)
Total investments and other assets 14,514 14,382
Total non-current assets 41,819 42,034
Total assets 213,981 206,336
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(Millions of yen)
As of March 31, 2012 As of March 31, 2011
Liabilities
Current liabilities
Notes and accounts payable 9,220 7,777
Short-term loans 5,253 1,338
Accrued income taxes 4,034 2,269
Reserve for bonuses 1,200 1,453
Allowance for sales returns 1,545 1,780
Allowance for game arcade closings 260 487
Asset retirement obligation 2 63
Other 12,258 13,332
Total current liabilities 33,778 28,504
Non-current liabilities
Corporate bonds 35,000 35,000
Allowance for employees' retirement benefits 3,808 3,061
Allowance for directors' retirement benefits 234 266
Allowance for game arcade closings 584 590
Deferred tax liabilities 2,605 2,577
Asset retirement obligation 149 657
Other 523 534
Total non-current liabilities 42,906 42,687
Total liabilities 76,684 71,192
Net assets
Shareholders' equity
Common stock 15,204 15,204
Capital surplus 44,444 44,444
Retained earnings 85,320 82,711
Treasury stock (861) (859)
Total shareholders' equity 144,108 141,501
Accumulated other comprehensive income
Unrealized loss on revaluation of other investment securities 124 (14)
